MBA570 Exam II Reference: Chapter 8—Process Management: Lean and Six Sigma in the Supply Chain/ Chapter 9—Domestic U.S. and Global Logistics/ Chapter 10—Customer Relationship Management/ Chapter 11—Global Location Decisions/ Chapter 12—Service Response Logistics/ Chapter 13—Supply Chain Process Integration / Chapter 14—Performance Measurement Along the Supply Chain

Chapter 8—Process Management: Lean and Six Sigma in the Supply Chain/ Chapter 9—Domestic U.S. and Global Logistics/ Chapter 10—Customer Relationship Management/ Chapter 11—Global Location Decisions/ Chapter 12—Service Re ...

Chapter 8—Process Management: Lean and Six Sigma in the Supply Chain/ Chapter 9—Domestic U.S. and Global Logistics/ Chapter 10—Customer Relationship Management/ Chapter 11—Global Location Decisions/ Chapter 12—Service Response Logistics/ Chapter 13—Supply Chain Process Integration / Chapter 14—Performance Measurement Along the Supply Chain MBA570 Exam II Reference Chapter 8—Process Management: Lean and Six Sigma in the Supply Chain TRUE/FALSE 1. Lean production is an operating philosophy or mindset that essentially attempts to minimize the impact of system variability and flaws in forecasting through the use of high safety stock inventories. F PTS: 1 REF: p. 253-255 2. Lean production and Six Sigma quality are essentially two terms that mean the same thing. F PTS: 1 REF: p. 253-255 | p. 270-273 3. Efficient Consumer Response and Keiretsu Relationships are supply chain concepts concerned with speed and flexibility. F PTS: 1 REF: p. 253 4. According to the text, in supply chain, the term lean has begun to replace the term JIT. T PTS: 1 REF: p. 253 5. The term "lean production" essentially refers to the Toyota Production System in its entirety. T PTS: 1 REF: p. 253 6. One of the primary elements of lean is keiretsu relationships. F PTS: 1 REF: p. 260 7. The five S's refer to various safety activities practiced by Toyota. F PTS: 1 REF: p. 261-262 8. Manufacturing cells are often U-shaped to make operator and material movements easier within the cell. T PTS: 1 REF: p. 262 9. Manufacturing layouts for an organization practicing lean manufacturing principles seek to maximize operator visibility, maintain an effective and efficient flow of people and materials, and minimize the distance that work in process must travel from one processing center to another processing center. T PTS: 1 REF: p. 263 10. Organizations practicing lean production often increase their inventory levels in the long-run in order to create a cushion against variability so that they can investigate and eliminate the weaknesses of their system. F PTS: 1 REF: p. 264 11. The primary design objective with lean layouts is to reduce wasted movements of workers, customers, and/or work-in-process. T PTS: 1 REF: p. 263-264 12. A lean system is also known as a push system. F PTS: 1 REF: p. 266 13. Carbon neutral organizations do not produce any carbon emissions. F PTS: 1 REF: p. 269 14. Six Sigma is a quality improvement concept developed by Motorola. T PTS: 1 REF: p. 270 15. Deming, Crosby, and Juran are all prominent quality professionals whose ideas were vital to Six Sigma. T PTS: 1 REF: p. 275-276 16. Deming's 14 points actually conflict with many Six Sigma concepts. F PTS: 1 REF: p. 276 17. When designing a manufacturing or service process, or even during the reengineering of such a process, a Pareto chart would be an essential tool for evaluating the process in terms of its action elements, waiting periods, and process flow. F PTS: 1 REF: p. 283-284 18. Statistical process control uses control charts to monitor the outputs of a process to identify variations due to assignable causes from variations due to common causes. T PTS: 1 REF: p. 287 19. For a certain loaf of bread it was found that it measured 16 inches in length, 4 inches in height, and 4 inches across, it was also found to weigh 1 pound; all of these measures can be considered attribute data. F PTS: 1 REF: p. 291 20. Acceptance sampling is a statistical technique that enables a reject or accept decision to be made based on information obtained from a representative sample drawn from the population. T PTS: 1 REF: p. 293 MULTIPLE CHOICE 1. While the philosophy of Six Sigma means different things to different people and is practiced differently in different companies, according to the textbook, two of the more important and agreed-upon elements of Six Sigma are: a. Minimizing inventories and increasing material flow b. Focusing on the customer and workforce involvement c. Rewarding employees and keeping defect rates below 2% d. Minimizing inventories and keeping defect rates below 1% B PTS: 1 REF: p. 251 2. The Quick Response program, developed in the 1980's, was an offshoot of the following supply chain concept: a. Efficient Consumer Response b. Six Sigma c. Just-in-Time d. Cross Docking C PTS: 1 REF: p. 253 3. Efficient Consumer Response was initially developed in the 1990's for the following industry: a. Fashion b. Grocery c. Small Electronics d. Automobile B PTS: 1 REF: p. 253 4. Lean thinking is a philosophy incorporating tools which seek to optimize: a. Human Resources b. Assets c. Productivity d. All of these D PTS: 1 REF: p. 253 5. Modern supply chains simultaneously pursue the goals of high-quality, fast response, and low cost because customers nowadays want both high levels of quality and responsiveness. A key manufacturing philosophy that emphasizes waste elimination and minimizing inventories to expose problems is: a. Just-in-time b. Quick Response c. Efficient Consumer Response d. Total Quality Management A PTS: 1 REF: p. 253 6. Japanese manufacturing firms sometimes create cooperative coalitions with their suppliers in order to provide the suppliers with a certain degree of financial support. What are these cooperative coalitions called? a. Jidoka Networks b. Keiretsu Networks c. Kanban Networks d. Kaizen Networks B PTS: 1 REF: p. 253 7. The following is a term that refers to error- or mistake proofing: a. Kaizen b. Muda c. Lean layouts d. Poka-yoke D PTS: 1 REF: p. 254 8. Which company probably played the largest role in the development of the Toyota Production System? a. General Motors b. Ford c. Chrysler d. Boeing B PTS: 1 REF: p. 253-257 9. Which of the following are among the most important elements of the lean production philosophy? a. Quality inspections and a standardized product line b. Fully automated assembly lines and a large supplier base c. Large inventories and quality inspections d. Waste reduction and continuous improvement D PTS: 1 REF: p. 257 10. Lean production emphasizes all of the following EXCEPT: a. Continuous improvement b. Reduction of waste c. Synchronization of material flows d. Large batch sizes D PTS: 1 REF: p. 257 11. Successful supply chains evolve through stages; the internally focused stage is characterized by all of the following EXCEPT: a. Functional silos b. Top-down management c. Long-term planning d. Internal measures used to monitor performance C PTS: 1 REF: p. 259 12. Successful supply chains evolve through stages; the following stage is characterized by an emphasis on cost reduction: a. Internally Focused b. Functional Integration c. Internal Integration d. External Integration B PTS: 1 REF: p. 259 13. Which of the following best describes the five S's? a. These were originally Japanese words relating to industrial housekeeping b. Five ways to reduce inventories on the shop floor c. These are five different kinds of manufacturing layouts d. Refer to methods for reducing setup times A PTS: 1 REF: p. 259 14. The element of lean involving firms working with buyers and customers with the mutual goal of eliminating waste, improving speed, and improving quality is referred to as: a. Waste reduction b. Lean supply chain relationships c. Lean layouts d. Continuous improvement B PTS: 1 REF: p. 260 15. Which of the following is NOT one of the Seven Wastes? a. Excess inventories b. Environmental waste c. Waiting time d. Scrap and rework B PTS: 1 REF: p. 260-261 16. All of the following are included in the seven wastes EXCEPT: a. Overproducing b. Overprocessing c. Overspending d. Waiting C PTS: 1 REF: p. 261 17. Which of the following layouts is primarily designed to process parts, components, or jobs requiring the same or similar processing steps, saving duplication of equipment and labor: a. Work centers b. Production kanban c. Work-in-process d. Manufacturing Cells D PTS: 1 REF: p. 264 18. Which of the following is NOT consistent with the lean philosophy? a. Cross-training employees to increase processing flexibility b. Developing a culture of continuous improvement within the organization c. Increasing batch size to take advantage of economies of scale d. Positioning WIP inventories near each processing center C PTS: 1 REF: p. 265 19. Calculate the inventory container size required given the following: Demand rate = 10 parts per hour, Safety stock required = 15% Number of containers = 14, Time to cycle through entire system = 6 hours a. 2 parts b. 3 parts c. 4 parts d. 5 parts D PTS: 1 REF: p. 265 20. Lean production systems are sometimes referred to as pull systems because demand from customers activates the production actions of the manufacturing facilities. In order for this demand to be communicated to everyone in the supply chain/manufacturing facility a signal must be passed from downstream processing centers to the upstream processing centers. This system of relaying signals is referred to as a: a. Kanban System b. Semaphore System c. Keiretsu Network d. TQM Network A PTS: 1 REF: p. 265-267 21. Calculate the defects per million opportunities (DPMO) given the following: Blake, owner of Blakester's T-shirt Shoppe, keeps track of customer complaints. For each T-shirt sold, there are four possible complaints: T-shirt shrinks, poor quality, design wears off, and doesn't fit right. Each week, Blake calculates the rate of T-shirt "defects" per total T-shirts sold, and then uses this information to determine his company's DPMO. During the past week, his company sold 1200 T-shirts. His company received 22 customer shrinkage complaints, 16 poor quality complaints, 12 design wears off complaints, 8 doesn't fit right complaints. Calculate his firm's DPMO. a. 69,600 b. 0.193 c. 5.8 x 106 d. 12,083 D PTS: 1 REF: p. 268 22. Which of the following quality gurus believed that companies should strive for zero defects and that quality was, in a sense, free since quality improvement programs invariably paid for themselves? a. Juran b. Deming c. Baldrige d. Crosby D PTS: 1 REF: p. 274 23. According to the text, the ability to satisfy customer expectations can be referred to simply as: a. Reliability b. Lean Six Sigma c. Quality d. Durability C PTS: 1 REF: p. 275 24. A company that produces 8 pound bags of rice gathered 5 samples of 6 bags each. The weights of each bags' contents are listed below. Bag Number Sample 1 2 3 4 5 6 1 7.98 8.34 8.02 7.94 8.44 7.68 2 8.33 8.22 8.08 8.51 8.41 8.28 3 7.89 7.77 7.91 8.04 8 7.89 4 8.24 8.18 7.83 8.05 7.9 8.16 5 7.87 8.13 7.92 7.99 8.1 7.81 What would you plot on the x-bar chart for sample 2? a. All of the following numbers: 8.33, 8.22, 8.08, 8.51, 8.41, 8.28 b. All of the following numbers: 8.34, 8.22, 7.77, 8.18, 8.13 c. Only 8.130 d. Only 8.305 D PTS: 1 REF: p. 286-288 25. A company sells eggs in boxes with 12 cartons and 12 eggs in each carton, thus there are 144 eggs in each box. The organization wants to construct a P-chart to track the proportion of broken eggs in each sample. If the company used one box of eggs in each sample in the dataset, what would be the centerline, upper control limit(UCL), and lower control limit(LCL) for the appropriate P-chart? (Use z = 3.) Choose the closest answer. Sample Eggs Sample Eggs Sample Eggs 1 3 8 6 15 5 2 5 9 4 16 0 3 3 10 9 17 2 4 4 11 2 18 6 5 2 12 6 19 2 6 4 13 5 20 1 7 2 14 1 TOTAL 72 a. Centerline = 0.50, UCL = 0.625, LCL = 0.375 b. Centerline = 0.025, UCL = 0.64, LCL = 0 c. Centerline = 0.30, UCL = 0.70, LCL = 0 d. Centerline = 0.083, UCL = 0.152, LCL = 0.014 B PTS: 1 REF: p. 289-290 SHORT ANSWER 1. Why is the workforce considered such an important element of lean production? Lean production is a philosophy that centers upon the ideals of eliminating waste and continuously improving. Employees are the keys to identifying and developing waste reduction programs and building a culture of continuous improvement in a flexible production environment. But here are some ways employees contribute to eliminating waste, creating a flexible production system, and improving the organization: a. Cross trained employees add processing flexibility b. Employees are capable of inspecting quality throughout the processing stages c. Employees not only identify problems, but are empowered to fix problems d. Skilled and well trained employees are more equipped to identify and fix high-level problems e. An intelligent workforce is more capable of supporting a strong program of continuous improvement PTS: 5 REF: p. 266-267 2. Discuss the linkages between lean production and environmental sustainability. Since lean production is ultimately concerned with waste reduction throughout the firm and its supply chains, the linkage between lean production and environmental sustainability should seem clear. Many organizations have realized the positive impact lean production can have on their environmental performance  adopting lean practices reduces the cost of environmental management and then leads to improved environmental performance. Further, lean production increases the possibility that firms will adopt more advanced environmental management systems, leading to yet further improvements in environmental performance. PTS: 5 REF: p. 267-268 3. There are four stages in supply chain management evolution. What is the last stage of supply chain management evolution? List two characteristics of this stage: Stage 4: External Integration Characteristics: Extending integration efforts to suppliers and customers Realization of need to control goods and info to 2nd/3rd tier suppliers Emphasis on alliance development and communication capabilities PTS: 5 REF: p. 257 4. List THREE of the statistical tools of Six Sigma. Flow diagrams Check sheets Pareto charts Cause and effect diagrams Control charts PTS: 5 REF: p. 281-291 ESSAY 1. What are the TWO primary techniques/philosophies discussed in Chapter 8 that are used to manage processes in the supply chain such that they'll meet the needs of customers today. Provide the prime objectives for each of the two techniques/philosophies. Also, for each technique, provide three elements used to achieve the prime objectives. PTS: 10 2. Provide an overview of the beliefs of each of the following quality professionals: W. E. Deming Philip Crosby Joseph Juran PTS: 10 3. Describe SPC and Acceptance Sampling. What is the key difference between the two? PTS: 10 Chapter 9—Domestic U.S. and Global Logistics TRUE/FALSE 1. The responsibility of transportation is to create both time utility and place utility, which means that products will be delivered at precisely the right time to the desired location. T PTS: 1 REF: p. 303 2. According to the textbook, the five basic modes of transportation are motor, rail, air, water, and cyberspace. F PTS: 1 REF: p. 306 3. A small LTL shipment that originates on a truck in Los Angeles and is moved from Los Angeles to Phoenix where it is unloaded and put onto another truck for final shipment to Denver would be considered an intermodal shipment since it utilizes more than one vehicle during shipment. F PTS: 1 REF: p. 306-307 4. A shipment that originates in Los Angeles and is placed inside a sealed standardized 8' by 8' by 20' container attached to a truck trailer and is moved from Los Angeles to Phoenix where the container is then moved to a railcar for final shipment to Denver where it would then be loaded onto another truck trailer would be considered an intermodal shipment since the container remained sealed throughout the shipment. T PTS: 1 REF: p. 306-307 5. Generally speaking, rail carriers are less expensive than motor carriers. T PTS: 1 REF: p. 308 6. While high speed trains in the United States are commonly utilized to provide quick delivery of product, countries like Japan and France are struggling to develop a competitive high-speed rail system. F PTS: 1 REF: p. 308-309 7. Because air transport is so expensive the best cargo candidates for air travel are those cargo shipments with a high cost to weight ratio. T PTS: 1 REF: p. 309-310 8. Limitations of air carrier transport include cost and airport accessibility. T PTS: 1 REF: p. 309-310 9. In order to provide more comprehensive delivery service, some freight-only airlines have invested in developing their own motor carrier fleets to provide full door to door service delivery. T PTS: 1 REF: p. 309-310 10. In cost-of-service pricing, the cost of shipping increases proportionally with distance. F PTS: 1 REF: p. 312 11. With FOB pricing, a supplier is the legal owner of a product until the product reaches its destination. T PTS: 1 REF: p. 313 12. When a supplier provides a price quote to a buyer for supplies that includes transportation to the buyer's location this is known as FOB destination pricing, or free on board to the shipment's destination. T PTS: 1 REF: p. 313 13. The primary difference between FOB origination and FOB destination is that FOB destination requires that the supplier legal own the product until it reaches the destination; in FOB origination the buyer takes ownership immediately and is thus responsible for arranging delivery. T PTS: 1 REF: p. 313 14. While transportation regulation and deregulation both have their supporters, proponents of regulation consider it to be good since it is said to encourage competition and allows the negotiation of prices to dictate market costs. F PTS: 1 REF: p. 316 15. The Department of Transportation was created by the 1920 Transportation Act. F PTS: 1 REF: p. 318 16. Private warehouses refer to warehouses that are owned by the firm storing the goods. T PTS: 1 REF: p. 321 17. Efficient supply chain management distribution requires that modern warehouses concentrate their efforts on a wide array of warehousing and distribution functions like storing purchases, work in progress inventories, and finished goods inventories, receiving shipments, breaking down shipments, repackaging, and the distribution of components. T PTS: 1 REF: p. 322 18. Risk pooling is a strategy that attempts to use fewer warehouses to decrease the required safety stock levels since the negatively correlated market demands reduce the overall demand variance across the markets which the centralized warehouse services. T PTS: 1 REF: p. 323 19. International intermediaries can provide shipping, consolidation, and other import and export services. Some examples of these international intermediaries include: foreign freight forwarders, NVOCCs, FTZs, and TOFCs. F PTS: 1 REF: p. 337 20. Some of the e-commerce related services that transportation companies offer nowadays to remain competitive include allowing customers to plan itineraries, get freight quotes, and track shipments online. T PTS: 1 REF: p. 337 MULTIPLE CHOICE 1. The supply chain management element that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements is also referred to as: a. Operations b. Transportation planning c. Logistics d. Procurement C PTS: 1 REF: p. 303 2. Which of the following carriers typically transports goods for the company that owns the carrier, they are not subject to economic regulation, and since the fleets are rather large the cost of transport is very likely less than if the company had hired another company to provide the service? a. Common carrier b. Exempt Carrier c. Contract Carrier d. Private Carrier D PTS: 1 REF: p. 305 3. What does LTL stand for in the transportation industry? a. Logistical Train-car Lift b. Less-Than-Truckload c. Large Truck Leasing d. Local Train Logistics carriers B PTS: 1 REF: p. 306-307 4. Which of the following types of warehouses takes a large number of LTL shipments and repackages them in TL or CL quantities to a manufacturer or user-facility located in another area or region? a. Consolidation warehouse b. Private warehouse c. Breakbulk warehouse d. Public warehouse A PTS: 1 REF: p. 306-307 5. Which of the following modes of cargo transport can be characterized as being the most inexpensive and very slow, yet good for transporting very heavy goods a long-distance? a. Air Carriers b. Rail Carriers c. Water Carriers d. Motor Carriers C PTS: 1 REF: p. 306-310 6. What is the abbreviation for a truck trailer which is placed on a flat railcar that would then be pulled by a train engine? a. TOFC b. COFC c. NVOCC d. TTFC A PTS: 1 REF: p. 308 7. According to the textbook, the largest ocean containerships can carry how many twenty-foot containers? a. Between 3,000 and 5,000 b. Between 5,000 and 8,000 c. Between 8,000 and 10,000 d. Over 10,000 D PTS: 1 REF: p. 308-311 8. Real time location systems (RTLS) are used for the following type of transportation: a. Motor carriers b. Rail Carriers c. Air carriers d. Water carriers B PTS: 1 REF: p. 309 9. Which of the following is NOT a characteristic of cost-of-service pricing? a. Prices are established based on fixed and variable costs of transportation b. Prices vary based on volume and distance c. Prices tend to rise as shipping distance increases d. Carriers price their services at the highest levels the markets will bear D PTS: 1 REF: p. 312 10. According to the text, FOB destination pricing is typically preferred for all of the following EXCEPT: a. High-value shipments b. Buyer has little transportation expertise c. Buyer is purchasing a reoccurring order d. Small shipments C PTS: 1 REF: p. 313 11. The first major transportation regulation in the U.S. was which of the following: a. Interstate Commerce Act b. Motor Carrier Act c. Granger Laws d. Interstate Initiation Act C PTS: 1 REF: p. 316-317 12. Which of the following would be considered an act of deregulation? a. Reed Bullwinkle act  legalized rate bureaus or conferences b. Granger law  Established maximum rates, prohibited discrimination, and forbade mergers for railroads. c. Trucking Industry Regulatory Reform Act  Motor carriers freed from filing rates with the Interstate Commerce Commission d. Freight Forwarders Act  Allowed Interstate Commerce Commission control over freight forwarders; controlled entry, rates, and services. C PTS: 1 REF: p. 316-318 13. The transportation legislation that created the Interstate Commerce Commission (ICC) was which of the following: a. Interstate Commerce Act b. Motor Carrier Act c. Granger Laws d. Interstate Initiation Act A PTS: 1 REF: p. 317 14. Which of the following legislative acts is NOT in support of transportation deregulation? a. Railroad Revitalization and Regulatory Reform Act b. Staggers Rail Act c. FAA Authorization Act d. Reed-Bulwinkle Act D PTS: 1 REF: p. 317-320 15. The acts of receiving shipments, breaking down shipments, repackaging shipments, and distributing components to a manufacturing location or finished products to customers by a distribution center is referred to as: a. Piggy backing b. Crossdocking c. Transshipping d. Customs Brokering B PTS: 1 REF: p. 321 16. According to the text, currently the three largest private warehouse operators in North America are: a. United Parcel Service, Wal-Mart and Sears Holding Corp. b. United Parcel Service, Target and U.S. Army c. Target, Microsoft and U.S. Army d. Wal-Mart, Ford Motor Corp. and U.S. Army A PTS: 1 REF: p. 321 17. Public warehouses can provide a wide range of services. Which of the following is NOT one of the services offered by public warehouses? a. Breakbulk b. Assembly c. Repackaging d. High security shipment D PTS: 1 REF: p. 322 18. Which of the following is NOT consistent with a decentralized warehousing system? a. Higher safety stocks required b. Shorter lead times c. Lower transportation fees d. Lower total operating costs D PTS: 1 REF: p. 323 19. A furniture manufacturer presently owns a total of four warehouses in the following cities Sacramento, Phoenix, Cincinnati, and Atlanta. The average inventory levels for the four warehouses are 8000 units, 10,000 units, 10,000 units, and 8000 units, respectively. They plan on moving all of their inventory to one warehouse in Memphis. Using the square root rule, what will be the required average inventory level at the new central Memphis warehouse required to maintain the system's present 98% customer service level? (Choose the closest answer.) a. 9000 b. 18000 c. 20000 d. 24500 D PTS: 1 REF: p. 323-324 20. According to the text, a warehouse location strategy that proposes locating a warehouse closest to the sources of supply is referred to as: a. Market positioned strategy b. Supply positioned strategy c. Product positioned strategy d. Intermediately positioned strategy C PTS: 1 REF: p. 325 21. The following are all examples of lean warehousing capabilities EXCEPT: a. Decreased assembly operations b. Greater emphasis on crossdocking c. Reduced lot sizes and shipping quantities d. Increased automation A PTS: 1 REF: p. 326 22. A transportation intermediary used to consolidate large numbers of small shipments to fill entire truck trailers or rail cars to achieve truckload or carload transportation rates is referred to as: a. Consolidation forwarder b. Load broker c. Transportation broker d. Freight forwarder D PTS: 1 REF: p. 330 23. Which of the following was NOT mentioned in the textbook as being one of the more popular logistics management software applications? a. Transportation management systems b. Freight management systems c. Warehouse management systems d. Returns management systems B PTS: 1 REF: p. 333-336 24. Which of the following is similar to a travel agent for cargo since they provide services like documentation completion, special rate handling, and customs clearance, in addition to their consolidating of small shipments to fill entire truckloads? a. Transportation Broker b. Freight Forwarder c. Shippers' Association d. Integrated Logistics Service Provider B PTS: 1 REF: p. 336-337 25. Which of the following international intermediaries helps foreign buyers and sellers find each other and then handles all of the shipping arrangements and documentation preparation? a. Customs broker b. Foreign freight forwarder c. Trading company d. NVOCC C PTS: 1 REF: p. 337 SHORT ANSWER 1. Warehousing is considered a very important part of the transportation process. Why is it, though, that many buildings that used to be called warehouses typically refer to themselves as distribution centers nowadays? PTS: 5 REF: p. 318-319 2. Does risk pooling favor a centralized or decentralized warehousing system? Why? PTS: 5 REF: p. 321-323 3. List and explain three capabilities of lean warehousing. PTS: 5 REF: p. 324-325 4. Suppose you have a shipment of products that needs to be transported. What type of service does each of the following intermediaries offer? • Freight forwarders • Transportation brokers • Shippers' Associations ESSAY 1. International Cosmopolitan is a company that sells an enormous amount of fine jewelry worldwide from its headquarters in Paris, France. Presently 10% of their revenues come from sales in the United States. International Cosmopolitan would like to grow the business by about 200% over the next three years. Presently, a majority of their product is kept in a private warehouse in France. While the shipments to United States will always be relatively small in size due to the cost and nature of the product, International Cosmopolitan would still like to take advantage of any possible distribution efficiencies by sending their shipments to a distribution center in United States that can then package their small shipments with other jewelry shipments headed towards common retailers and/or wholesalers. In order to do so they'll need to make accommodations for shipment, find retail and wholesale companies willing to distribute their product, find intermediaries to both help export the product out of France and help import the product into the United States. Based on the above information and your knowledge of international transportation, answer the questions below in the hopes of providing International Cosmopolitan with some preliminary information that will aid them in creating a successful logistical itinerary: • Which modes of transportation should be utilized in getting the product from International Cosmopolitan's warehouse in France to a distribution center in United States? Why? • Which intermediaries should International Cosmopolitan consider in finding customers in United States and exporting the product out of a France? Why? • Which intermediary should International Cosmopolitan consider in helping them import the product into United States? Why? • Briefly discuss their warehousing plan. Does it make sense? Why? PTS: 10 2. As a logistics specialist for your organization you are being asked to develop a model, which will aid your company in future global expansion projects. Answer the following questions as part of your initial step in developing a helpful model. • List 5 key components of the local infrastructure that must be investigated before committing to expansion? Why are these important? • Provide 3 aspects of government relating to logistics that need to be considered before committing to expansion? • List 5 key components of the local infrastructure that must be investigated before committing to expansion? Why are these important? • Provide 3 aspects of government relating to logistics that need to be considered before committing to expansion? 1. 2. 3. 4. 5. 6. 7. 8. PTS: 10 3. List the five modes of transportation. For each mode provide a brief description (or examples) of the type of cargo that typically travels via that mode of transport. PTS: 10 Chapter 10—Customer Relationship Management TRUE/FALSE 1. While a company's Internet presence may be desirable for finding information or conducting product transfers, touching products and talking face-to-face with company representatives remains an integral part of the supplier-customer interface. T PTS: 1 REF: p. 347-348 2. While a well planned and organized CRM plan can be extremely useful in developing effective and efficient marketing programs for retailers, they are not particularly helpful for manufacturing companies like GM since their touches with the customer are few. F PTS: 1 REF: p. 348-349 3. According to the text, customer relationship management refers to building and maintaining profitable long-term customer relationships. T PTS: 1 REF: p. 348 4. Through the use permission marketing programs, customers are allowed to select the type of communications companies can make with them. Actually, customers can even choose to be completed eliminated from both e-mail and traditional mailing lists. T PTS: 1 REF: p. 349 5. Up until now CRM has been very effective for most companies because it has focused on building customers' trust and loyalty, ultimately building a strong relationship with the customer through programs that make it easy for the customer to return products and get information from people inside the organization. F PTS: 1 REF: p. 349 6. Because integrated supply chains require good suppliers to act as good supply-chain customer partners, CRM programs should include first-tier customer training and education to ensure proper use of purchase products. T PTS: 1 REF: p. 349 7. Segmenting customers on the basis of things like products purchased, sales history, demographic information, and desired product features can dilute the results of a CRM program; segmenting customers should be avoided. F PTS: 1 REF: p. 351 8. Cross-selling is a term used when customers are sold additional products as the result of an initial purchase. T PTS: 1 REF: p. 352 9. When web sites suggest other items for purchase based on already purchased items, this is an example of Clickstream Selling. F PTS: 1 REF: p. 352-353 10. As customers navigate through a website CRM software can record and analyze the customer's clickstream so website images and ads can be tailored to the needs and desires of that individual customer. T PTS: 1 REF: p. 353 11. Sales force automation products help salespeople better manage their accounts, their business opportunities, and communications while away from the office. T PTS: 1 REF: p. 354 12. Cloud computing is a term used to describe how a customer navigates a website. F PTS: 1 REF: p. 355 13. Some of the ways customers evaluate the customer service capabilities of an organization are through their experiences with human response call centers, automated response call centers, and consumer web sites. T PTS: 1 REF: p. 358-361 14. According to the text, poor planning is typically the cause for most unsuccessful CRM initiatives. T PTS: 1 REF: p. 363 15. The objectives of any CRM initiative should be focused on what the company can reasonable achieve. F PTS: 1 REF: p. 364 16. It is best to integrate information about and results relating to marketing efforts like customer loyalty programs, frequent user cards, and credit card applications within an organization. Integrating the efforts of these programs between employees and an organization's IT systems (data warehouses) can help managers make more informed customer-focused decisions. T PTS: 1 REF: p. 364 17. Future trends in CRM include coping with the delicate issue of privacy, utilization of social media, and utilization of cloud computing. T PTS: 1 REF: p. 366-369 18. In general, companies avoid social media sites since they rarely are able to find useful information about customer opinions via blogs and social networking sites. T PTS: 1 REF: p. 367 19. Companies that provide on-demand applications are often referred to as data warehouses. F PTS: 1 REF: p. 369 20. Private clouds allow corporate users to internally manage their data centers. T PTS: 1 REF: p. 369 MULTIPLE CHOICE 1. Which of the following statements about consumer focused programs/initiatives is TRUE? a. Customers want additional support services and other offerings that add value to their initial product or service purchases b. CRM programs are simple in that they involve treating customers properly and making them feel valued c. CRM programs are complex in that they involve identifying all customers, their needs, and then creating a system geared towards completely satisfying the customer. d. All of these D PTS: 1 REF: p. 346-348 2. Which of the following are required elements of an effective CRM initiative? a. Sending out promotional materials via e-mails and traditional mail to a large random group of a potential customers b. Segmenting customers c. Preserving a traditional sales force that communicates with the supply-chain via a traditional paper document/contract system d. All of these B PTS: 1 REF: p. 349 3. The online retailer Ecatalog.com has decided to send consumers of the new John Grisham book an e-mail with suggestions for books with similar themes and has also offered them a 20% discount if those suggested books were purchased. This type of marketing/promotion is an example of: a. Target marketing b. Segmented selling c. Clickstream selling d. Cross-selling D PTS: 1 REF: p. 350 4. CRM can allow organizations to identify which customers have stopped purchasing products or services from the organization so that the organization can target those former customers for future promotions and/or perhaps to investigate why they stopped purchasing in the first place. The CRM attribute is called: a. Customer profitability determination b. Customer-base retention initiative c. Customer defection analysis d. Customer clickstream analysis C PTS: 1 REF: p. 351 5. Companies work very hard to reduce the number of their present customers which never return. This customer defection is often referred to as: a. Customer churn b. Clickstream defection c. Balking d. Revenue Exodus A PTS: 1 REF: p. 351 6. All of the following are required elements for the development of an effective CRM initiative EXCEPT: a. Segmenting customers b. Customer value determination c. Utilization of MRP d. Personalizing customer communications C PTS: 1 REF: p. 351 7. You work for a company that segments customers by demographic information markets specifically to those customers who are located in the Los Angeles area. This is an example of: a. Target marketing b. Cross-selling c. Geographic marketing d. Personalized customer communication A PTS: 1 REF: p. 351 8. Your company's marketing efforts allow customers to "opt-out" of receiving email advertisers. This is referred to as: a. Event-based marketing b. Relationship marketing c. Customer churn d. Customer preference marketing B PTS: 1 REF: p. 351 9. The use of quick response codes (QR Codes) to retrieve marketing information is a type of: a. Geographic marketing b. Target marketing c. Customer churn d. Mobile marketing D PTS: 1 REF: p. 352 10. The element of a CRM program involved with the use of data-mining software and customer behavior analytics is: a. Segmenting customers b. Predicting customer behaviors c. Customer value determination d. Customer preference determination B PTS: 1 REF: p. 353 11. The element of a CRM program in which a customer's lifetime value is calculated is referred to as: a. Segmenting customers b. Predicting customer behaviors c. Customer value determination d. Customer preference determination B PTS: 1 REF: p. 354 12. When an organization attempts to offer the right products and services to customers at the right time through the offer of individual promotions tied to specific events, like birthdays and anniversaries, this is referred to as: a. Event-based marketing b. Segmented selling c. Personal holiday marketing d. Extreme segmentation marketing A PTS: 1 REF: p. 354 13. Which of the following is a method that organizations typically use in attempting to effectively manage the relationships between the organization and its customers at the customer service level? a. Reengineering and/or automating call centers based on past call center data b. Developing web sites that allow customers to access their personal accounts and/or information like hours of operation, store locations, and product information c. Utilizing CRM programs to administer personalized surveys based specific customer segments d. All of these D PTS: 1 REF: p. 356-361 14. A system which allows sales managers to obtain current information and reporting capabilities regarding each salesperson's activities on each customer's account is referred to as a: a. Sales activity management system b. Sales territory management system c. Lead management system d. Knowledge management system B PTS: 1 REF: p. 357 15. Your top sales executive leaves your company to work for a competitor. Fortunately, all of her notes regarding prior dealings with customers have been captured in a: a. Sales activity management system b. Sales territory management system c. Lead management system d. Knowledge management system D PTS: 1 REF: p. 357 16. According to the text, in logistics, a "perfect order" occurs when: a. The Seven R Rule is satisfied b. A customer is successfully cross-selled c. Customer churn does not occur d. Clickstream is minimized A PTS: 1 REF: p. 358 17. Which of the following customer service elements can be classified as examples of pre-transaction elements? a. Salesperson politeness and order processing capabilities b. Warranty repair capabilities and customer complaint resolution c. Product returns and information about the operation of the product purchased d. Customer service policies and the company's choice of organizational structure D PTS: 1 REF: p. 358 18. Which of the following customer service elements can be classified as examples of post-transaction elements? a. Salesperson politeness b. Customer complaint resolution c. Customer service policies d. The company's choice of organizational structure B PTS: 1 REF: p. 358 19. You are a manager at Sunnydale Appliances. A customer who recently purchased a dishwasher contacts you with a problem and requests warranty information. According to the text, this is an example of: a. Customer churn b. Posttransaction customer service c. Customer management d. Pretransaction customer service B PTS: 1 REF: p. 360-361 20. All of the following are requirements for designing and implementing a successful CRM program EXCEPT: a. Support from the firm's top executive b. Knowledge of the tools available to aid in CRM c. Adherence to a static CRM program d. Continuous awareness of customers' changing requirements B PTS: 1 REF: p. 363 21. Users in a company can retrieve and study a large amount of information about consumers by housing that information in a centralized database that is commonly referred to as a: a. Clickstream b. QR code c. Data warehouse d. Social media site C PTS: 1 REF: p. 364 22. According to the textbook, a performance measurement type for CRM would include: a. Customer loyalty b. Customer Satisfaction c. Average sales revenue per customer d. All of these D PTS: 1 REF: p. 365 23. When integrating new CRM modules, it is important that compatible CRM modules are linked to a(n): a. Data warehouse b. Data knowledge system c. Sales activity management system d. Sales force automation system A PTS: 1 REF: p. 366 24. Since many companies do not have the knowledge, resources (money/people), or capability of building an infrastructure to support a CRM program, many companies have chosen to outsource this responsibility to a(n): a. ASP b. Customer Support Specialist Firm c. DSS d. Marketing Facilitator A PTS: 1 REF: p. 369 25. According to the textbook, which of the following statements is TRUE? a. CRM stands for customer resource management b. ASP stands for application service provider c. CRM stands for centralized resource management d. ASP stands for accelerated shipment process B PTS: 1 REF: p. 369 SHORT ANSWER 1. The textbook describes a perfect order as one in which all of seven of the rules in the "Seven Rs Rule" are satisfied. List of five of the seven R's. 1. Right Product 2. Right Quantity 3. Right Condition 4. Right Place 5. Right Time 6. Right Customer 7. Right Cost PTS: 5 REF: p. 356 2. List three key ingredients required to successfully design and/or implement a CRM program. 1. CRM Plan Development  A CRM project requires a well-developed set of objectives, a plan that fits within the corporate strategy, and appropriate process for choosing the correct CRM applications, integration or replacement of existing methods, personnel requirements, training, policy development, continued maintenance, and cost and time frame for implementation 2. Involvement of CRM Users from the Program's Outset 3. Choosing the Correct Application and Application Provider 4. Integration of New and Existing CRM Applications 5. Establishing Appropriate Performance Metrics 6. Providing Appropriate Training for CRM Users PTS: 5 REF: p. 361-366 3. What are three of the recent trends in CRM? Customer data privacy Social media Cloud computing PTS: 5 REF: p. 366-369 4. Customer service elements can be classified into three elements. What are those three classifications? Briefly describe each. ESSAY 1. Below are trends to consider in the area of CRM programs. Briefly describe the issue and discuss why it is something important to monitor. a. Privacy b. Use of ASPs c. Global uses of CRM d. Integration issues PTS: 10 2. A CRM program primarily attempts to monitor and/or manage three things: an organization's customers, sales force, and customer service level. List two different tools or components of CRM for each of three areas: 1. Customers 2. Sales Force 3. Customer Service Level Describe how each tool or component is utilized in the monitoring and/or managing of the customers, sales force, or customer service level. PTS: 10 3. Define THREE of the goals of the common CRM program. How does CRM software attempt to achieve each of these goals. Chapter 11—Global Location Decisions TRUE/FALSE 1. According to the text, with increasing globalization the access to global markets and corporate networks makes the role of location less important as a source of competitive advantage. F PTS: 1 REF: p. 377 2. According to the text, global location decisions are made to optimize the performance of the supply chain and be consistent with the firm's competitive strategy. T PTS: 1 REF: p. 377 3. According to the text, the primary objective of an offshore factory is to take advantage of low labor costs. T PTS: 1 REF: p. 379 4. A lead factory is set up in a location with an abundance of advanced suppliers, competitors, research facilities and knowledge centers in order to have access to the most current information on materials, components, technologies and products. F PTS: 1 REF: p. 379 5. The WTO is the only global international organization dealing with the rules of trade between nations. T PTS: 1 REF: p. 380 6. China's economy is shifting from labor-intensive industries to arrears like marketing and the production of high technology products that typically provide higher levels of value. T PTS: 1 REF: p. 380 7. The Americas have two primary regional trade agreements, NAFTA, an agreement between the United States, Canada, and Mexico, and COMESA, an agreement between all of the South American countries. F PTS: 1 REF: p. 380 8. Facility location is a business decision that will ultimately impact issues like the cost of supplies, facilities, and materials, as well as lead times and customer service levels. T PTS: 1 REF: p. 380 9. Regional trade agreements and the World Trade Organization provide a framework for managers in terms of investigating important facility location elements like tariffs, costs, and the free flow of goods and services in different regions of the world. T PTS: 1 REF: p. 380 10. The European Union (EU) created the world's largest free trade area. F PTS: 1 REF: p. 381 11. While many developing countries are attractive to companies seeking out low labor costs, there are other important factors such as productivity levels, employee skill and education levels, turnover rates, and employment trends that certain industries find just as important, if not more important, in determining facilities' location. T PTS: 1 REF: p. 381 12. When trying to gauge a nation's competitiveness a manager may want to consult one of two primary world competitiveness rankings, the World Competitiveness Yearbook published by IMD and The Global Competitiveness Report prepared by the World Economic Forum. T PTS: 1 REF: p. 383-385 13. A country that imposes high tariffs encourages foreign-based companies to import goods. F PTS: 1 REF: p. 384-385 14. While the development and proliferation of the Internet and web-based commerce has not completely eliminated the relevancy of facilities location, because of the Internet, the speed of delivery and cost in serving the customer are no longer factors in determining the strategic location of an organization's facilities. F PTS: 1 REF: p. 387 15. Many multinational corporations are moving their facilities and headquarters out of Taiwan and some Southeast Asian countries in order to take advantage of the proximity to customers. The more attractive customer markets are developing in China. T PTS: 1 REF: p. 387 16. If an organization wanted to set up a facility in an area near a number of advanced suppliers, competitors, and research facilities in order to have access to current information on materials, components, and technologies the organization would likely set up a source factory. F PTS: 1 REF: p. 388 17. A list of quality-of-life factors would most likely include proximity to customers, proximity to suppliers, tariff rates, and currency stability. F PTS: 1 REF: p. 389 18. A right-to-work law allows employees to decide for themselves whether or not they want to join or financially support a union. T PTS: 1 REF: p. 390 19. According to the textbook, two models that utilize quantitative data, which can help determine the attractiveness of one location versus another, are the Break-Even Model and the Extrapolated Average Cost Model. F PTS: 1 REF: p. 391 20. While business clusters seem logical in well-established areas with developed economies like Silicon Valley and Hollywood, California because companies can easily collaborate, compete, and share knowledge, some high-tech clusters have developed in areas with emerging economies such as Mexico, Singapore, and India. T PTS: 1 REF: p. 394 MULTIPLE CHOICE 1. Organizations that primarily compete on speed of delivery, such as FedEx and UPS, utilize which of the following approaches for location determination: a. Sourcing center b. Hub and spoke c. Air and ground d. LTL consolidation B PTS: 1 REF: p. 378 2. Which of the following strategic foreign facilities is set-up primarily to avoid tariff barriers, minimize exchange risk, and/or take advantage of government incentives? Ultimately the factory operates as most normal factories making only minor improvements in either the products or processes. a. Offshore factory b. Server factory c. Source factory d. Outpost factory B PTS: 1 REF: p. 379 3. Which of the following strategic foreign facilities is set-up primarily produce products at a low cost with minimal technical and managerial resources? The items produced at these factories are often exported to countries where costs to produce similar items would be higher. a. Offshore factory b. Server factory c. Source factory d. Outpost factory A PTS: 1 REF: p. 379 4. According to the text, when the location of a factory is dictated by low production costs, fairly developed infrastructure and availability of skilled workers the factory is referred to as a(n): a. Offshore factory b. Source factory c. Server factory d. Lead factory B PTS: 1 REF: p. 379 5. Your company needs to determine the appropriate location of a factory in order to take advantage of government incentives and avoid tariff barriers, the type of factory needed can be referred to as a(n): a. Offshore factory b. Source factory c. Server Factory d. Lead Factory C PTS: 1 REF: p. 379 6. The type of factory which is the source of product and process innovation and competitive advantage for the entire organization is referred to as a(n): a. Offshore factory b. Source factory c. Server factory d. Lead factory D PTS: 1 REF: p. 379 7. Examples of regional trade agreements include all of the following EXCEPT: a. Association of Southeast Asian Nations (ASEAN) b. European Union (EU) c. Association of African Markets (AAM) d. Southern Common Market (MERCOSUR) C PTS: 1 REF: p. 380 8. Which of the following issues is (are) important to consider when trying to determine the location of a firm's facilities? a. The stability in the location considered b. Environmental issues regulated by domestic laws or international trade agreements c. Access to suppliers from the location considered d. All of these D PTS: 1 REF: p. 380 9. Which of the following trade agreements was set up after WWII and originally consisted of six countries? a. Association of Southeast Asian Nations (ASEAN) b. European Union (EU) c. Association of African Markets (AAM) d. Southern Common Market (MERCOSUR) B PTS: 1 REF: p. 380-382 10. Which of the following regional trade agreements is paired with the appropriate region of the world? a. NAFTA  Southeast Asian Nations b. COMESA  United States, Canada, and Mexico c. MERCOSUR  Argentina, Brazil, Paraguay, and Uruguay d. EU  Middle East nations, not including Israel C PTS: 1 REF: p. 380-382 11. The World Economic Forum creates International Competitive Rankings that are ranked on their Pillars of Competitiveness. How many Pillars of Competitiveness does the World Economic Forum have? a. Three b. Five c. Ten d. Twelve D PTS: 1 REF: p. 382 12. Some companies import components, use them in the production of their end items, and ultimately export them to other countries. If a company wanted to import the components duty-free, use those components in the production of their end items, and then export them to other countries, they would most likely utilize a(n): a. Duty-free Territory b. Foreign Trade Zone c. International Cross Docking Zone d. International Processing Center B PTS: 1 REF: p. 385-386 13. Which of the following is a factor in choosing a location? a. Currency Stability b. Proximity to Markets c. Access to Suppliers d. All of these D PTS: 1 REF: p. 386-388 14. Which of the following would be considered a quality of life factor? a. Education b. Arts, culture, and recreation c. Community safety d. All of these D PTS: 1 REF: p. 389-390 15. Certain states in the United States have laws that secure the rights of employees to decide for themselves whether or not to join or financially support a labor union. These laws are called: a. Employee freedom acts b. Free trade laws c. Right-to-work laws d. Sanctioned union acts C PTS: 1 REF: p. 390 16. Which of the following secures the right of employees to decide whether or not to join or financially support a union? a. Union shop laws b. Union planning forums c. Ethical union initiatives d. Right-to-work laws D PTS: 1 REF: p. 390 17. Use the breakeven model to determine which of the statements below is TRUE according to the information provided in the table relating to two different locations considered for a new manufacturing facility. LOCATION ANNUAL FIXED COSTS UNIT VARIABLE COSTS Site A $50,000 $10 Site B $20,000 $30 a. Site A is the desired location if the production rate is 1000 units per year b. The breakeven point for these two locations is 1500 units per year c. Site B is the desired location if the production rate is 2000 units per year d. The breakeven point for these two locations is 500 units per year B PTS: 1 REF: p. 391 18. A certain organization trying to decide where to locate their future factory is considering three locations. They are taking into account three factors: labor costs, currency stability, and proximity to market. Using the weights for each factor listed below and the scores achieved by each of the three considered locations, determine which location should be chosen for the new facility based on the weighted factory location model. SCORES (Maximum 100) FACTOR WEIGHT SITE A SITE B SITE C Labor Cost 0.30 90 80 80 Currency Stability 0.40 80 85 80 Proximity to Market 0.30 80 80 80 a. Site A b. Site B c. Site C d. All sites are equally attractive A PTS: 1 REF: p. 391 19. A certain organization trying to decide where to locate their future factory is considering three locations. They are taking into account three factors: labor costs, currency stability, and proximity to market. Using the weights for each factor listed below and the scores achieved by each of the three considered locations, determine which location should be chosen for the new facility based on the weighted factory location model. SCORES (Maximum 100) FACTOR WEIGHT SITE A SITE B SITE C Labor Cost 0.20 90 65 90 Currency Stability 0.50 80 90 80 Proximity to Market 0.30 80 80 80 a. Site A b. Site B c. Site C d. All sites are equally attractive D PTS: 1 REF: p. 391 20. The following facility location technique uses quantitative and qualitative dimensions and is subject to interpretation and bias by the analyst: a. Break-even model b. Business cluster analysis model c. Weighted-factor rating model d. Mean absolute deviation model C PTS: 1 REF: p. 391 21. The following facility location technique uses fixed and variable costs to analyze potential locations: a. Break-even model b. Business cluster analysis model c. Weighted-factor rating model d. Mean absolute deviation model A PTS: 1 REF: p. 391 22. All of the following are considered components of fixed costs EXCEPT: a. Cost of land b. Equipment c. Insurance d. Utilities D PTS: 1 REF: p. 391 23. All of the following are considered components of variable costs EXCEPT: a. Labor b. Materials c. Property Taxes d. Utilities C PTS: 1 REF: p. 391 24. When a number of interconnected companies and institutions from a particular field are located in a single geographic location, that location is referred to is a(n): a. Business cluster b. Metroplex c. Regional business center d. Industrial point A PTS: 1 REF: p. 395 25. The Bruntland Commission defines ____ as the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs. a. Lean manufacturing b. Sustainable development c. Six Sigma manufacturing d. Progressive design B PTS: 1 REF: p. 396 SHORT ANSWER 1. What are the three levels of any location decision? The global market or country selection The sub-region or state selection The community and site selection PTS: 5 REF: p. 380 2. What specific advantages would a Free Trade Zone offer a manufacturing company? Also, under which circumstances would a company utilize a Free Trade Zone? A free trade zone offers a manufacturing firm the ability to import components or subassemblies into a designated area without paying any import related tariffs on the condition that any subassemblies or end items assembled in the designated free trade zone will be exported to customers in other countries. A company would seek to utilize a free trade zone when import tariffs for subassemblies or components were considerable and somewhat significant amount of product was going to ultimately be re-exported. This allows a company to avoid the opportunity cost associated with paying the import tariffs. PTS: 5 REF: p. 385-386 3. When an organization is considering future facilities locations, provide 3 human resource related issues that the organization would need to consider. While there are a number of possible answers this question, some of the more basic answers discussed in the textbook include: a. Cost of Labor b. Employee pool skill set c. Employee pool education level d. Are right to work laws/labor unions legal in the location considered. e. Quality-of-life issues for employees  schools, taxes, housing, natural environment, public safety, health... PTS: 5 REF: p. 388-390 4. Briefly define a business cluster. Give a location that exemplifies a real-life example of a business cluster. Describe why it should be considered a business cluster. Business cluster - Geographic concentration of interconnected firms in a particular field Some possible examples: Hollywood  Film industry Silicon Valley  Software and technology Detroit  Car manufacturing Mexico  Electronic manufacturers PTS: 5 REF: p. 394-395 ESSAY 1. Suppose a company in the United States was trying to decide whether to locate their manufacturing facility in the United States or in Southeast Asia. Consider the following information in answering the question below: List four reasons why it would be favorable to locate the new manufacturing facility in the United States rather than in Southeast Asia. PTS: 10 2. If a country is seeking to attract foreign investment in the form of manufacturing related facilities, list 3 things the government might do to increase the chances of this occurring. 3. Your organization is considering building a new automobile manufacturing plant. The company is considering building their facility in either China or Tennessee (USA). Chapter 12—Service Response Logistics TRUE/FALSE 1. When a customer takes their automobile to a carwash, the carwash provides state utility to the vehicle. T PTS: 1 REF: p. 403 2. In most services, customers are either directly or indirectly involved in the production of the service itself. T PTS: 1 REF: p. 403 3. Service facilities are normally decentralized. T PTS: 1 REF: p. 404 4. Service organizations need to consider the fact that the services they provide are not consumed by the immediate customer, rather, services are typically passed on to customers farther down a distribution channel. F PTS: 1 REF: p. 404 5. Since the 1950s, the percentage of service related jobs has increased much more rapidly than the percentage of manufacturing and agriculture related jobs in United States due to the use of technology and mass production techniques developed during that time. T PTS: 1 REF: p. 404 6. In order to maximize customer satisfaction/visits, service organizations must be able to identify customer needs, create systems that can quickly satisfy these needs in a cost-effective manner, hire, train, and schedule service representatives effectively, utilize technology effectively, and conveniently locate service facilities. T PTS: 1 REF: p. 404 7. Baumol's disease refers to the fact that multiple factor productivity measures tend to be bad, because firms often concentrate on improving one, while neglecting others. F PTS: 1 REF: p. 405 8. A service bundle includes the explicit service, the supporting facility, the facilitating goods, as well as the implicit services. T PTS: 1 REF: p. 408 9. Location strategy is important in that it can provide barriers to entry, and competitive positioning, as well as generating additional demand. T PTS: 1 REF: p. 409 10. Long-term customer satisfaction, especially in the face of service failures, requires organizations to empower front-line service personnel to identify problems and then provide solutions quickly and an empathetic way. T PTS: 1 REF: p. 409 11. The optimal capacity utilization for an organization would be 100%. F PTS: 1 REF: p. 417 12. Cross-training workers is a typical capacity management technique for times when demand exceeds capacity. T PTS: 1 REF: p. 418 13. When a level demand strategy is used for managing capacity, the firm is required to use a demand management or queue management tactic to deal with excess customers. T PTS: 1 REF: p. 418 14. When a chase demand strategy is used for managing capacity, effective plans must be in place to utilize, transfer or reduce service capacity when there is excess available and to develop or borrow capacity quickly when demand exceeds capacity. T PTS: 1 REF: p. 418 15. According to the text, good queue management consists of managing only what the customer perceives to be as the waiting time. F PTS: 1 REF: p. 423 16. Balking occurs when customers decide to leave the queue after some length of waiting time in the queue. F PTS: 1 REF: p. 425 17. A very popular fast food restaurant is presently staffed with three cash register attendants that are taking orders. Upon entering the restaurant, customers must choose from three separate lines, each of which leads to one of the three registers. Immediately upon placing their order with the register attendant, customers are given their food and drinks by the register attendant. To analyze this situation you would use the queuing model for an infinite source, multiple servers, and multiple channels. T PTS: 1 REF: p. 426 18. A retailer with two checkout stands is an example of a single-channel, multiple-phase queuing system. F PTS: 1 REF: p. 426 19. Themed restaurants such as the ESPN zone (sports theme), Rainforest Cafe (jungle theme), and Chuck E. Cheese (kids theme) are all examples of Entertailment facilities. F PTS: 1 REF: p. 432 20. In a franchise, the franchisee invests some of their own money, while paying a percentage of sales to the franchiser. T PTS: 1 REF: p. 434 21. When companies sell products both online and in traditional retail stores this is called a mixed internet distribution strategy. T PTS: 1 REF: p. 436 22. The five dimensions of service quality include: Reliability, durability, performance, aesthetics, and availability. F PTS: 1 REF: p. 437 MULTIPLE CHOICE 1. Which of the following is an example of a person that would be considered to provide a Pure Service? a. Attorney/Lawyer b. Management Consultant c. Musical Entertainer d. All of these D PTS: 1 REF: p. 403 2. Countries that shift from a manufacturing-oriented economy to a service-oriented economy sometimes see their productivity growth decline over time. This phenomenon is called: a. Service Shrink b. Deming's Decline c. State Utility d. Baumol's Disease D PTS: 1 REF: p. 405 3. The Wal-Mart effect is best described by which of the following? a. As large retailers locate in communities, the put smaller companies our of business b. Information technologies have allowed large retailers to maintain good productivity growth rates c. Wal-Mart's use of supplier capacity has made it difficult for other companies to find Suppliers d. The growth of large retailers has had a negative impact on the environment B PTS: 1 REF: p. 405 4. Which of the following would result in an INCREASE in productivity? a. The value/amount of the inputs used increases and the value/amount of outputs decreases b. The value/amount of the inputs used increases and the value/amount of outputs stays the same c. The value/amount of the inputs used stays the same and the value/amount of outputs decreases d. The value/amount of the inputs used stays the same and the value/amount of outputs increases D PTS: 1 REF: p. 405 5. You are determining the productivity of your company's service. In your calculation, the inputs used consist of the sum of your company's labor, materials, energy, and capital costs. This can also be referred to as: a. Multiple-factor productivity b. Productivity utilization c. Multi-input efficiency d. Extended productivity A PTS: 1 REF: p. 405 6. The three generic competitive strategies are: a. profit-based, nonprofits, and free services b. cost leadership, differentiation, and focus c. manufacturing, service, and retail d. mass-production, make-to-order, and services B PTS: 1 REF: p. 406-408 7. Which of the following organizations would be considered an example of a global service? a. FedEx b. Deutsche Bank c. Wal-Mart International d. All of these D PTS: 1 REF: p. 406 8. Which of the following strategies is being followed by a company that is based on creating a service that is considered to offer unique service elements for which customers may consider paying higher prices? a. Focus Strategy b. Differentiation Strategy c. Cost Leadership Strategy d. Exclusivity Strategy B PTS: 1 REF: p. 407 9. According to the text, which of the following is a service strategy characterized by the idea that a service can serve a narrow target market better than a broad market? a. Differentiation strategy b. Demand strategy c. Focus strategy d. Transitional strategy C PTS: 1 REF: p. 408 10. Which of the following items would be considered a facilitating product? a. The automobiles washed by the car wash b. The suits being cleaned by the dry cleaner c. The tools used to fix your car at an auto shop d. All of these C PTS: 1 REF: p. 413 11. The number of customers per day an organization's service delivery systems are designed to serve within a certain time frame is referred to as: a. Service Capacity b. Capacity Utilization c. Productivity Potential d. Service Throughput A PTS: 1 REF: p. 417 12. A basic strategy for managing capacity when the firm utilizes a constant amount of capacity regardless of demand variations is: a. Level demand strategy b. Differentiation demand strategy c. Chase demand strategy d. Baumol's demand strategy A PTS: 1 REF: p. 417 13. Which of the following would NOT be considered an acceptable option in managing capacity when demand exceeds available service capacity? a. Utilizing fewer facilitating products b. Utilizing technological tools like computers and automated systems c. Cross-training and sharing employees d. Using customers to provide services A PTS: 1 REF: p. 418 14. According to the text, the primary elements of all queuing systems include all of the following EXCEPT: a. Input process b. Queue characteristics c. Output process d. Service characteristics C PTS: 1 REF: p. 423 15. Assuming the number of arrivals per time period is Poisson distributed with a mean arrival rate of 6 customers per hour, determine the mean interarrival time. a. 10 minutes b. 6 minutes c. 60 minutes d. 14 minutes A PTS: 1 REF: p. 424 16. If the average service rate is 15 minutes per customer, and assuming the negative exponential distribution is used to describe the randomness of the service time distribution, then determine the probability that the service time will be less than or equal to 10 minutes. a. zero b. 0.49 c. 0.28 d. 0.62 B PTS: 1 REF: p. 424 17. When studying queuing models, a customer who enters the waiting line but leaves the system prior to receiving service is said to have: a. Balked b. Reneged c. Stalled d. Disposed B PTS: 1 REF: p. 425 18. Service provided by multiple servers acting in parallel is referred to as: a. Multi-platform servicescape b. Multiple-phase queuing system c. Multiple-channel queuing system d. Multi-delivery servicescape C PTS: 1 REF: p. 426 19. The average transaction at a single channel, single phase automatic teller can be completed in 7.5 minutes and customers arrive at the average rate of one every ten minutes. On average, what is the server utilization? (Choose the closest answer.) a. 0.167 b. 0.75 c. 0.125 d. 1.33 B PTS: 1 REF: p. 427-428 20. The average transaction at an automatic teller can be completed in 7.5 minutes and customers arrive at the average rate of one every ten minutes. On average, how many customers are there in line? (Choose the closest answer.) a. 4.000 Customers b. 0.300 Customers c. 3.000 Customers d. 0.375 Customers C PTS: 1 REF: p. 428 21. If  = 6 CUSTOMERS/HOUR and  = 11 CUSTOMERS/HOUR, in a single server model, find the probability that there will be exactly 1 person in LINE. a. 0.162 b. 0.297 c. 0.248 d. 0.135 D PTS: 1 REF: p. 428 22. First-come-first-served is an example of a(n): a. queue discipline b. unfair waiting policy c. channel queuing arrangement d. single-phase queue design A PTS: 1 REF: p. 425 23. David Maister's First Rule of Service is: a. It always takes longer than you think to perform the service b. You can't please all the customers all the time c. Satisfaction = perception  expectation d. Under-promise and over-deliver C PTS: 1 REF: p. 430 24. All of the following are included in the five dimensions of service quality EXCEPT: a. Reliability b. Responsiveness c. Reasonability d. Assurance C PTS: 1 REF: p. 437 25. The dimension of service quality concerned with using knowledgeable, competent, courteous employees who convey trust and confidence to customers is referred to as: a. Reliability b. Responsiveness c. Reasonability d. Assurance D PTS: 1 REF: p. 437 SHORT ANSWER 1. What are three key differences between goods and services industries/organizations? 1. Services cannot be inventoried 2. Services are often unique  the ability to customize services to satisfy each individual customer is often considered the primary competitive advantage that separates service organizations in the same industry. 3. Services have high customer/server interaction 4. Services are decentralized  In other words, location is important. There are quite a few other responses students may cite, which instructors may deem acceptable. Here are just a couple of examples: 5. Services are produced and received simultaneously 6. Barriers to entry in the service arena are rather low compared to those in manufacturing industries 7. Hours of operation are in more important in the service arena. PTS: 5 REF: p. 404 2. What is the difference between a level demand strategy and a chase demand strategy? The key difference between the two strategies is how the firm manages its own capacity to meet demand. In a level demand strategy a firm utilizes a constant amount of capacity regardless of demand variations. In a chase demand strategy a firm varies capacity according to variations in demand. PTS: 5 REF: p. 417-418 3. As a manager of a queuing system, what are some important system details you'd like to know about in order to manage the system effectively? 1. Average arrival rate of customers 2. In what order will customers be serviced? 3. Average service rate of service providers/servers 4. How are customer arrivals and service times distributed? System variation? 5. How patient are customers? Will customers leave the line before receiving service? Will customers perceive the service quality is being low due to long waits? 6. How can customers be kept in line even longer without lowering their perceptions of service quality? There are quite a few other responses students may cite, which instructors may deem acceptable. Here are just a couple of examples: 7. How will advertising affect arrival rates? Price changes? New locations? 8. How will training affect service rates? 9. Is inefficiency due to process capabilities or server capabilities? 10. Should there be specialty lines? Cash only lines? 15 items or less lines? PTS: 5 REF: p. 423 4. How do you calculate a firm's capacity utilization? If capacity utilization is greater than 1, what are some of the resulting impacts to the service firm? Capacity utilization = (Actual customers served per period) / Capacity When capacity utilization exceeds 1.0: service become congested service times increase wait times increase perceived quality of service deteriorates PTS: 5 REF: p. 417 ESSAY 1. Describe the key considerations of service managers which can help in providing a better service experience? 1. Layout of service areas 2. Average arrival rate of customers 3. In what order will customers be serviced? 4. Average service rate of service providers/servers 5. How are customer arrivals and service times distributed? System variation? 6. How patient are customers? Will customers leave the line before receiving service? Will customers perceive the service quality is being low due to long waits? 7. How can customers be kept in line even longer without lowering their perceptions of service quality? There are quite a few other responses students may cite, which instructors may deem acceptable. Here are just a couple of examples: 8. How will advertising affect arrival rates? Price changes? New locations? 9. How will training affect service rates? 10. Is inefficiency due to process capabilities or server capabilities? 11. Should there be specialty lines? Cash only lines? 15 items or less lines? PTS: 10 2. Discuss the important issues involved in managing a global service. PTS: 10 3. A bank provides service through a call center to customers internationally. Explain the importance of each of the following in terms of designing the call center and managing the daily operations: 1. Queuing management 2. Global service considerations 3. Facilitating products 4. Service quality expectations PTS: 10 Chapter 13—Supply Chain Process Integration TRUE/FALSE 1. According to the text, the ultimate goal in supply chain management is to create value for the services and products provided to end customers, which, in turn, will benefit the firms in the supply chain network. T PTS: 1 REF: p. 449 2. An important initial step in the supply chain integration model is for a firm to identify the primary trading partners so the firm can concentrate its time and resources on managing the important process links with these companies. T PTS: 1 REF: p. 450 3. It is important for all supply chain members to first understand the important characteristics upon which the supply chain end product is competing. Once this is understood, the supply chain members should all be using strategies consistent with those competitive characteristics when delivering their product and/or service. T PTS: 1 REF: p. 450-452 4. The development of functional silos within an organization is considered a key component to achieving successful supply chain process integration. F PTS: 1 REF: p. 452 5. The phrases "customer relationship management" and "customer service management" are interchangeable supply chain terms. F PTS: 1 REF: p. 452-453 6. According to the textbook, there are four key supply chain business processes: Purchasing, Manufacturing, Distribution, and Returns. F PTS: 1 REF: p. 452-453 7. The order fulfillment process relies on forecasting and techniques used to smooth demand variabilities when disparities exist between demand and supply. F PTS: 1 REF: p. 453 8. Manufacturing flow management is the key process that helps balance customer demand and the firm's output capabilities. F PTS: 1 REF: p. 453-454 9. One of the key supply chain business processes is supplier relationship management, which seeks to forecast demand and coordinate purchasing and distribution in an effort to balance customer demand with the firm's manufacturing capacity. F PTS: 1 REF: p. 452-456 10. Successful supply chain management requires the development of inter-organizational performance metrics and supply-chain performance metrics to maintain and continuously improve the effectiveness of key internal and external processes. T PTS: 1 REF: p. 452-454 11. Knowledge management solutions connect buyers and suppliers via the internet to aid in the integration of supply chains. T PTS: 1 REF: p. 460 12. Passive RFID Tags, which are mandated by Wal-Mart, are less expensive than active RFID tags, which have been used for healthcare and military applications. T PTS: 1 REF: p. 460-461 13. RFID tags, which stands for Radio Frequency Identification tag, is a technology that will be used to gain real-time inventory information about the geographic location of a product in an effort to insure that shelves are full and that supply chains are issuing replenishment orders in a timely fashion. T PTS: 1 REF: p. 460-461 14. RFID technology seeks to minimize supply chain visibility. F PTS: 1 REF: p. 460-465 15. Fear, uncertainty, and doubt between people and organizations are some primary obstacles preventing organizations from sharing information with supply-chain partners, as well as among coworkers. T PTS: 1 REF: p. 465-467 16. According to the text, training of supply chain partner employees is also known as collaborative education. T PTS: 1 REF: p. 467 17. When demand exceeds a supplier's finished goods available, a supplier may allocate product in proportion to what buyers ordered. This rationing often results in shortage gaming by the suppliers customers. T PTS: 1 REF: p. 469 18. Two methods for managing supply chain risk include utilizing a supply chain IT system and identifying backup suppliers. T PTS: 1 REF: p. 470-473 19. Forward buying is when companies purchase very small amounts of inventory. F PTS: 1 REF: p. 471 20. The most basic security system should include procedures and policies for securing facilities, personnel, computer systems, and freight shipments. T PTS: 1 REF: p. 474-475 MULTIPLE CHOICE 1. The coordination and sharing of information and resources to jointly manage a process is referred to as: a. Rationing b. Process Integration c. Gaming d. EDLP B PTS: 1 REF: p. 449 2. According to the text, mapping the network of primary trading partners is something that should be done in which stage of the supply chain integration model: a. Review and establish supply chain strategies b. Identify critical supply chain trading partners c. Align supply chain strategies with key supply chain process objectives d. Assess and improve internal integration of key supply chain processes B PTS: 1 REF: p. 450-451 3. According to the text, decisions regarding the types of parts purchased, suppliers used and the manufacturing process employed, should be decided in which phase of the supply chain integration model: a. Review and establish supply chain strategies b. Identify critical supply chain trading partners c. Align supply chain strategies with key supply chain process objectives d. Assess and improve internal integration of key supply chain processes A PTS: 1 REF: p. 451 4. A set of activities designed to produce a product or service for an internal or external customer is called a(n): a. Process b. System c. Strategy d. Organization A PTS: 1 REF: p. 452 5. According to the text, the phase of the supply chain integration model concerned with identifying the important processes linking each of the supply chain partners is: a. Review and establish supply chain strategies b. Identify critical supply chain trading partners c. Align supply chain strategies with key supply chain process objectives d. Assess and improve internal integration of key supply chain processes C PTS: 1 REF: p. 452 6. Which of the key supply chain business processes refers to meeting customer requirements by synchronizing the firm's marketing, production and distribution pl a. Customer relationship management process b. Customer demand organization process c. Order fulfillment process d. Supply chain synchronization process C PTS: 1 REF: p. 453 7. A customer approaches you with a question regarding her order status and shipping date; the information you provide is an example of which of the eight key supply chain business processes: a. Supply management process b. Demand management process c. Order management process d. Customer service management process D PTS: 1 REF: p. 453 8. According to the text, all of the following are considered key supply chain business processes EXCEPT: a. Knowledge management process b. Manufacturing flow management process c. Supplier relationship management process d. Returns management process A PTS: 1 REF: p. 453 9. Which of the following identifies the key customers, determines their needs, and then develops products and/or services to meet those needs? a. Customer Service Management b. Product Development and Commercialization c. Customer Relationship Management d. Demand Management C PTS: 1 REF: p. 452-453 10. Which of the following is NOT one of the eight key supply chain business processes? a. Product Development and Commercialization b. Customer Relationship Management c. Order Fulfillment d. Strategic Management D PTS: 1 REF: p. 453 11. Supply relationship management personnel routinely communicate with: a. Production personnel to obtain feedback on supplier and purchased item performance b. Marketing personnel for customer feedback c. Suppliers for new product development and performance feedback d. All of these D PTS: 1 REF: p. 453-455 12. According to the text, customer feedback mechanisms are developed as part of which supply chain business process: a. Customer relationship management process b. Knowledge management process c. Customer service management process d. Product development and commercialization process D PTS: 1 REF: p. 455 13. The primary enabler of the internal integration of key supply chain processes is a firm's: a. CRM program b. ERP system c. Data warehouse d. Legacy system B PTS: 1 REF: p. 458 14. Building, maintaining and strengthening beneficial relationships with suppliers and customers is accomplished through the use of: a. Data warehouses b. Legacy systems c. External process integration d. Order batching C PTS: 1 REF: p. 459 15. Which of the following is a vital element in developing a strong supply chain through the practice of process integration? a. Developing and implementing a strong information technology system that allows for fast and easy information exchanges between supply chain partners b. Partner collaborations on methods to improve processes within the supply chain c. Partnerships, which value information sharing and partner collaborations d. All of these D PTS: 1 REF: p. 456-461 16. The practice of buyers allowing suppliers to observe their demand, create a forecast, and determine their resupply schedules in the hopes of reducing inventories is called: a. Order Batching b. Forward Buying c. The Legacy System d. VMI D PTS: 1 REF: p. 468 17. Which of the following is a contributor to the bullwhip effect? a. Smaller Order Sizes b. Rationing c. EDLP d. VMI B PTS: 1 REF: p. 469 18. Which of the following is considered an obstacle to supply chain integration? a. RFID Technology b. Vendor Managed Inventory c. Lack of Supply Chain Visibility d. All of these C PTS: 1 REF: p. 462 19. Failing to see the big picture and acting only in regard to single firm in the supply chain can be referred to as: a. Silo mentality b. Balking c. Biased decision making d. Stockpiling A PTS: 1 REF: p. 462 20. According to the text, when a buyer allows some of their suppliers to observe actual demand, create a forecast and determine their resupply schedules, it is known as: a. Passive integration b. Collaborative inventory management c. Vendor managed inventory d. Cloud-based supply chain management C PTS: 1 REF: p. 468 21. Due to supply rationing, a buyer is being allotted 90% of her total orders. As a result, the buyer inflates her subsequent orders in an attempt to meet her real needs for demand. This strategy is known as: a. Stockpiling b. Bullwhip ordering c. Order fulfillment d. Shortage gaming D PTS: 1 REF: p. 470 22. Price fluctuations that are the result of special product promotions, quantity discounts, and other special pricing discounts by suppliers result in: a. Shortage Gaming b. Quantity Batching c. Buy-Back Gaming d. Forward Buying D PTS: 1 REF: p. 471 23. Companies that train the employees of their supply chain partners are engaging in: a. Collaborative education b. Integrative education programs c. Supplier certification d. Extended reach programs A PTS: 1 REF: p. 467 24. Which of the following would be considered a Supply Chain Risk Management activity? a. Increasing safety stock b. Diversify the supply base c. Utilize a supply chain IT system d. All of these D PTS: 1 REF: p. 471 25. The following supply chain security activities, creating a director of security position, hiring personnel with military and/or government experience, and performing a formal security risk assessment, would be classified as: a. Basic Initiatives b. Reactive Initiatives c. Proactive Initiatives d. Advanced Initiatives C PTS: 1 REF: p. 475-476 SHORT ANSWER 1. What is RFID technology and how will it aid in management of the supply chain? RFID stands for radio-frequency identification. In the near future, RFID is expected to be able to access real-time inventory information and allow companies to immediately replenish inventories when they are running low. This type of technology will allow supply chain managers to track inventory throughout the supply chain, collect information concerning demand, aid in keeping store shelves filled with product, and potentially decrease theft. PTS: 5 REF: p. 460-461 2. List and explain TWO of the causes of the bullwhip. 1. Demand Forecast Updating  Using varying customer orders to create an updated forecasts, production schedules, and purchased requirements 2. Order Batching  Ordering in large amounts in order to decrease order and transportation costs 3. Price fluctuations  Price incentives may cause erratic buying patterns when buyers attempt to stock up on inventory in order to take advantage of low costs, even though demand remains low/constant 4. Rationing and Shortage Gaming  shorting buyer orders when demand exceeds supply. This may cause buyers to over-inflate order sizes in an attempt to meet their demand during these times of short supply. PTS: 5 REF: p. 467-470 3. List FIVE of the eight supply chain business processes. 1. Customer relationship management 2. Customer service management 3. Demand management 4. Order fulfillment 5. Manufacturing flow management 6. Supplier relationship management 7. Product development and commercialization 8. Returns management PTS: 5 REF: p. 453 4. List and describe three obstacles to process integration along the supply chain. PTS: 5 REF: p. 461-468 ESSAY 1. The textbook states that "the bullwhip effect can be a pervasive and expensive problem along the supply chain." Answer the following questions in relation to the bullwhip effect: 1. Briefly describe the bullwhip effect. 2. List 2 key activities that cause the bullwhip effect. How do they exacerbate the problems associated with the bullwhip effect? 3. How can process integration help prevent/minimize the bullwhip effect? 4. List 2 other key activities that can act as deterrents against the bullwhip effect. How do they minimize and/or eliminate the problems associated with the bullwhip effect? 1. Briefly describe the bullwhip effect. 2. List 2 key activities that cause the bullwhip effect. How do they exacerbate the problems associated with the bullwhip effect? 1. 2. 3. 4. 3. How can process integration help prevent/minimize the bullwhip effect? 4. List 2 other key activities that can act as deterrents against the bullwhip effect. How do they minimize and/or eliminate the problems associated with the bullwhip effect? PTS: 10 2. The textbook lists the following activities as Supply Chain Risk Management activities: 1. Increasing safety stock and forward buying 2. Identify backup suppliers and logistics services 3. Diversify the supply base 4. Utilize a supply chain IT system 5. Develop a formal risk management program For each also provide the downside of utilizing that particular strategy. PTS: 10 3. List and describe FIVE of the eight key supply chain business processes. Chapter 14—Performance Measurement Along the Supply Chain TRUE/FALSE 1. In general, performance measurements systems are identical from company to company. F PTS: 1 REF: p. 483 2. To control and enhance the capabilities of companies across the supply chain, well-designed performance measurement systems must be implemented. T PTS: 1 REF: p. 484 3. Supply chain strategies must consider the trade-offs between the cost, quality, sustainability, and service requirements. T PTS: 1 REF: p. 485 4. While profit, revenue, and cost related metrics would seem to be useful in moving a company in the right direction, they are often difficult to tie to the good or poor behaviors of individual functional units or individual organizational processes. T PTS: 1 REF: p. 486-487 5. Using cost as a departmental or business unit performance measure can actually result in actions that raise costs for the organization. T PTS: 1 REF: p. 486-487 6. Total productivity is considered a single-factor productivity measure. F PTS: 1 REF: p. 488 7. A company has 5 employees that work an 8 hour shift. During those eight hours they make 80 units. The labor productivity would be 10.0. F PTS: 1 REF: p. 488-489 8. One of the primary steps in developing world-class performance measures is to identify the firm's strategic objectives. T PTS: 1 REF: p. 490 9. Supply chains that are flexible enough to quickly respond to changes in the marketplace are called demand-driven supply networks. T PTS: 1 REF: p. 491 10. In general, Wal-Mart has very little interest in green supply chain management. F PTS: 1 REF: p. 494 11. Companies can now acquire software that will aid in analyzing the present carbon footprint of their supply chains, which can in turn show how improvements to supply chain might lower their carbon footprint. T PTS: 1 REF: p. 494-495 12. Supply chain perfect order fulfillment performance measures the average percentage of orders that are filled on or before the requested delivery date. F PTS: 1 REF: p. 495 13. Supply chain cash-to-cash cycle time is a performance measure that provides the average number of days between selling the end product to the customer and receiving full payment for the goods. F PTS: 1 REF: p. 495 14. The traditional Balanced Scorecard framework consists of four perspectives: financial perspective, human resources perspective, inventory perspective, and the logistics perspective. F PTS: 1 REF: p. 496-497 15. The Balanced Scorecard approach to performance measurement seeks in to improve managerial decision-making by aligning an organization's performance measures with its strategic plan and goals. T PTS: 1 REF: p. 496-498 16. Some researchers have indicated that the Balanced Scorecard approach can problematic and costly to implement, and even after implementation may be unsuccessful in achieving the overall objectives. T PTS: 1 REF: p. 496-498 17. Web-based balanced scorecard applications are sometimes referred to as dashboards. T PTS: 1 REF: p. 498 18. A model used for integrating supply chains and measuring partner performance is the SCOR model which separates supply chain operations into four categories: Sourcing, Costs, Operations, and Returns. F PTS: 1 REF: p. 499-503 19. There are 4 standardized levels of process detail in the SCOR Model. F PTS: 1 REF: p. 503 20. SCORmark allows Supply Chain Council (SCC) members to benchmark performance against selected peer companies using a benchmarking portal at SCC's website. T PTS: 1 REF: p. 503 MULTIPLE CHOICE 1. Which of the following questions needs to be answered before designing the appropriate product/service to fulfill customer service expectations: a. Pricing of products b. Variety of products required c. Quality level desired d. All of these D PTS: 1 REF: p. 484 2. Once the supply chain partner requirements are understood, supply chain members can then: a. Develop an appropriate information technology system b. Develop their organizational skill sets c. Audit their capabilities to see if they are consistent with the needs of the end customers d. Implement a quality development program for the employees C PTS: 1 REF: p. 485 3. Dominant companies within a supply chain can use their buying power to: a. Leverage demands for supplier conformance to its supply chain requirements b. Eliminate the need for performance metrics c. Increase organizational productivity d. Motivate customers to change their buying preferences A PTS: 1 REF: p. 485 4. Traditional performance measures include: a. Cost and Revenue b. Revenue and SCOR c. Profit and Perfect Order Fulfillment d. SCOR and DCOR A PTS: 1 REF: p. 486 5. Which of the following is a problem with a company establishing standards for performance? For example: production rates of 10 units per hour. a. Employees are driven to work so fast they may make defects b. Employees and managers may produce false records c. Once performance goals are reached, incentives to improve may disappear d. All of these D PTS: 1 REF: p. 487 6. When utilizing performance standards, the difference between the standard and the actual performance is called: a. Productivity Gap b. Organizational Variance c. Certified Variance d. Performance Variance D PTS: 1 REF: p. 488 7. When departments operate in ____, departments are more focused on meeting functional standards instead of optimizing overall supply chain performance. a. SCOR b. Scorecarding c. Functional silos d. Collaborative relationships C PTS: 1 REF: p. 488 8. A company produces 400 bicycles every day. Each bicycle is worth $250. The inputs used to make those bicycles are labor, materials, and machine costs. The company pays their employees a total of $10,000 per day, the materials to make those bicycles cost $50 per bike, and the cost to operate the machines is $3000 per day. Based only on the data provided, what is this company's total productivity for one day? a. 3.03 b. 0.33 c. 0.77 d. 1.31 A PTS: 1 REF: p. 489 9. A company produces 750 bicycles every day. Each bicycle is worth $250. The inputs used to make those bicycles are labor, materials, and machine costs. The company pays their employees a total of $7500 per day, the materials to make those bicycles cost $75 per bike, and the cost to operate the machines is $2500 per day. Based only on the data provided, what is this company's total productivity for one day? a. 1.875 b. 2.830 c. 0.353 d. 3.333 B PTS: 1 REF: p. 489 10. According to the textbook, the initial step in creating an effective performance measurement system is: a. Develop the process b. Contact supply chain partners c. Identify the firm's strategic objectives d. Reduce firm debt to zero C PTS: 1 REF: p. 490 11. According to the textbook, which of the following zoos audited their waste recycling performance? a. San Diego Zoo b. Lincoln Park Zoo c. Phoenix Zoo d. Bronx Zoo A PTS: 1 REF: p. 491 12. According to the textbook, Best Buy has been working to a develop flexible and responsive supply chain that would be considered a: a. Push supply chain b. Demand-driven supply network c. SCOR supply chain d. GSCM B PTS: 1 REF: p. 491 13. World-class performance measures can be used in different functional areas of a firm to satisfy objectives, enhance the value of the firm's products and services, and increase customer satisfaction by providing measures in which of the following capability area(s)? a. Quality b. Cost c. Customer Service d. All of these D PTS: 1 REF: p. 492 14. Nowadays, successful supply chains are those that in the face of ever changing customer needs can continue to: a. Deliver the right combination of cost, quality, and customer service b. Increase the number of their suppliers c. Eliminate the need for performance metrics d. All of these A PTS: 1 REF: p. 492 15. Which of the following firms has partnered with the Sustainability Consortium to lead an effort to green their suppliers as well as the products they sell in their store? a. Amazon.com b. Nordstrom c. Wal-Mart d. Home Depot C PTS: 1 REF: p. 494 16. Which of the following supply chain performance metrics measures the average percentage of orders that are filled on or before the requested delivery date? a. Total supply chain management costs b. Supply chain perfect order fulfillment performance c. Supply chain cash-to-cash cycle time d. Supply chain delivery performance D PTS: 1 REF: p. 495 17. Which of the following supply chain performance metrics measures the average percentage of orders that arrive on time, complete and damage-free? a. Total supply chain management costs b. Supply chain perfect order fulfillment performance c. Supply chain cash-to-cash cycle time d. Supply chain delivery performance B PTS: 1 REF: p. 495 18. Which of the following would be considered a way to measure the Supply Chain Environmental Performance? a. Percentage of partners that are ISO 9000 certified b. Measuring the Supply Chain Carbon-to-Carbon Cycle Time c. Percentage of partners that have created a director of environmental sustainability position in their company d. All of these C PTS: 1 REF: p. 496 19. Which of the following was designed by Kaplan and Norton in an effort to align performance measures with strategic plans and goals? a. Balanced Scorecard b. SCOR c. DCOR d. GSCM A PTS: 1 REF: p. 496 20. Which of the following is NOT one of the four perspectives of the BSC framework? a. Financial b. Internal Business Process c. Customer d. Reliability D PTS: 1 REF: p. 497 21. Which of the following BSC framework perspectives deals with new product development, innovative elements of processes, and time-based measures? a. Financial b. Internal Business Process c. Customer d. Reliability B PTS: 1 REF: p. 497 22. Companies typically like to design scorecards that fit their business and industry. As a result there are now software applications that can help companies design scorecards that fit their individual needs. These web-based scorecard applications are often referred to as: a. E-Cards b. Executive Barometers c. Dashboards d. SCOR Boards C PTS: 1 REF: p. 498 23. Which of the following is focused on integrating supply chains and measuring partner performance? a. SCOR b. Balanced Scorecard c. GSCM d. Single-factor productivity measures D PTS: 1 REF: p. 499 24. According to the SCOR model, which of the following is NOT one of the five supply chain operation process categories? a. Plan b. Sell c. Return d. Source B PTS: 1 REF: p. 500-501 25. Which of the following models have been added to the SCOR model in an effort to more fully integrate the supply chain with marketing, sales, and design? a. DCOR and CCOR b. ACOR and ABOR c. SCOR-2 and SCOR-3 d. DeCOR and EnCORE A PTS: 1 REF: p. 503 SHORT ANSWER 1. Explain the difference between Total Productivity and Labor productivity. 2. The textbook described 7 important steps in creating an effective performance measurement system. List three of those critical steps. 1. Identify a the firm's strategic objectives 2. Identify each functional area's needs for achieving the firm's strategic objectives 3. Design and document metrics for each functional area that track the required capabilities 4. Assure the compatibility and strategic focus of the performance measures to be used. 5. Implement the new performance monitoring system 6. Identify internal and external trends likely to affect firm performance over time. 7. Periodically re-evaluate the firm's performance measurement system PTS: 5 REF: p. 490-491 3. The textbook described 7 supply chain specific performance measures. List three of those metrics. 1. Total supply chain management costs 2. Supply chain cash-to-cash cycle time 3. Supply chain production flexibility 4. Supply Chain delivery performance 5. Supply chain perfect order fulfillment performance 6. Supply chain e-business performance 7. Supply chain environmental performance PTS: 5 REF: p. 495-496 4. What are the four primary perspectives of the balanced scorecard 1. Financial 2. Internal business process 3. Customer 4. Learning and growth PTS: 5 REF: p. 496-498 ESSAY 1. For the following FOUR performance measures show how each is beneficial in achieving both typical organizational/supply chain goals and also sustainability goals. 1. Defect Rate  Total defects / Total Units Produced 2. Amount of scrap material produced per workstation 3. Percentage of orders delivered to the correct address 4. Costs associated with packaging 1. Defect Rate 2. Scrap Material 3. Orders sent to the wrong address 4. Packaging Costs PTS: 10 2. How can using organizational costs, revenues, and profitability measures be ineffective or even damaging in managing a process, system, or organization? 3. Briefly, explain why understanding the end customer is important to all supply chain parties in developing an effective performance measurement system.